March 22, 2012

 

Asia's lower grain prices to boost demand

 

 

On the back of the latest downward correction in prices, Asian demand for grains may rise in the next few days, trade participants said.

 

Near-month corn and soy futures on the Chicago Board of Trade that hit four- and six-month highs this month have been falling for the last two days on profit-taking ahead of quarterly book closing by institutional funds.

 

May soys and corn are down almost US$0.30 a bushel and US$0.25 a bushel at US$13.45 and US$6.43 respectively. Wheat is down almost US$0.30 and now hovering around US$6.39.

 

"Overall, fundamentals are still strong due to the drought in South America and it is a good opportunity to buy at current levels," a Singapore-based executive with a global commodity trader said.

 

Even before the latest price fall, buyers were snapping up cargoes due to a medium-term bullish outlook, he said.

 

South Korea's flour millers purchased US wheat from Columbia Grain International in a recent deal for May 16-June 15 shipment, traders said.

 

Mills purchased Soft Western White wheat around US$263/tonne, Hard Red Winter wheat around US$288/tonne and Northern Spring around US$347/tonne, all free on board, they said.

 

South Korea purchased a cargo of Australian wheat from Cargill for shipment in the second half of July.

 

Traders said 30,200 tonnes of blended, noodle-grade wheat was bought around US$277/tonne and 4,800 tonnes of Australian Hard wheat around US$306/tonne, both FOB.

 

Bangladesh is seeking 50,000 tonnes of optional origin wheat in a tender and also plans to buy another 100,000 tonnes of Ukrainian wheat from Kiev-based state-run company, Khlib Investbud.

 

"Khlib Investbud executives were here recently and both sides have agreed in principle on a deal for 100,000 tonnes, but the price is yet to be finalised," a Bangladeshi food ministry official said.

 

Ukraine will make four price offers for different grades of wheat, the official said.

 

Japan issued a tender Wednesday seeking seven cargoes of four grades of milling wheat totalling 133,792 tonnes, a government official said.

 

Extensive re-sowing of crops is on in Ukraine due to lack of snow cover during February's cold spell, ANZ Banking Group said in a note.

 

Overall, Ukraine's wheat production is now forecast to fall by 30% in 2012, but the total area sown to corn this spring will set a new record between 4-5 million hectares, it said.